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Bank of Queensland sold $1.4 billion in residential mortgage-backed securities, the largest such bond sale in Australia since Westpac Banking's deal in December. The Australian Office of Financial Management bought a significant amount of the issue as part of efforts to support the mortgage market, a source said.

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Britain's residential mortgage-backed securities market will feel the pain as the Bank of England's Term-Funding Scheme allows banks to borrow at rates nearing the 0.25% main rate and to refinance existing loans from the Funding for Lending Scheme in the TFS, leaving little incentive for banks to borrow from public debt markets. Investors rely on the RMBS market as an important source of highly rated assets.

AMP Bank, a regional lender in Australia, rolled out the country's first residential mortgage-backed securities deal under the government's newly revised support scheme. The programme was altered to attract more investors from the private sector. The Australian Office of Financial Management, which administers the scheme, is expected to support the bank's RMBS deal, but details are not yet clear.

Westpac Banking is offering a A$1 billion residential mortgage-backed securities deal that could reopen the once-vibrant securitisation market in Australia. The offer is the first by a major financial institution since before the global credit crunch. Smaller lenders have sold similar deals, however.

The Australian Office of Financial Management bought slightly less than half of a A$470 million residential mortgage-backed securities deal priced by mortgage lender FirstMac. Other investors picked up nearly A$255 million of the issue. ANZ, Macquarie Bank, Westpac and HSBC were lead managers on the deal.

Although only a few prospective deals are said to be in the works in the primary European securitisation market, a residential mortgage-backed securities deal from Barclays is arousing some interest. The Barclays RMBS features an innovative twist and likely will test the European market and investor sentiment for securitised deals. In addition to that deal, Royal Bank of Scotland, Lloyds Banking Group and others also are reportedly considering stepping back into the securitisation market.